How To Save Thousands Using Zero Interest Credit Cards Effectively

Zero interest credit cards are typically designed for consumers who have existing credit card debt and want to reduce their monthly payments. But it’s not quite that simple! Not all zero interest cards are offered on the same terms and it’s really important to understand what to look out for to ensure you don’t end up with more debt in the long run. If you need a zero interest credit card, read on for our tips on how to get yourself the best possible deal. Pick the right card and you can save thousands of Dollars in interest payments!

What does zero interest mean to me?

Credit card providers make money from the interest they charge you on your monthly credit card balance. This ‘interest’ is actually called APR or annual percentage rate and you should think of it as the total cost of having the credit line with your card issuer. The average APR rates for credit cards in America today run between 14% and 20%.

When you transfer your balance to a zero interest credit card, the balance that you owe does not attract any APR so the debt stays at the same amount as the day you signed on. When you transfer your debt to a zero interest card there is usually a balance transfer fee of between 3% to 5% that is added to your total debt. From that moment onwards for the duration of the zero interest promotion, your debt will not increase. It’s is important to note that if you don’t clear all of your debt before your APR switches from zero interest, you will then be subject to paying the APR again. Credit card providers thrive on people who take zero interest cards out and fail to pay down the full balance in that time because the APR rates are very high on balances the move from zero interest.

How do I apply?

You can apply for a zero interest card in exactly the same way you would any other credit card but pay close attention to the small print. There are big differences between the zero interest cards and there are some terrific cards out there but there are also some duds.

You should not apply for a credit card (of any type) any more frequently than once every six months. This is because your credit score can take a small hit when you apply for a credit card, particularly a zero interest credit card and card issuers get nervous when they see lots of hits on your credit score. To secure a zero interest credit card you will need to have a decent credit score in the first place so keep that in mind too.

What should I look out for in the small print?

When you transfer a balance to a zero interest card there is usually a balance transfer fee. This fee is usually added to your balance and sits as there as part of the total zero interest debt. A decent card provider will offer a balance rate of between 3% to 5%.

Don’t use zero interest cards for anything other than a means to pay down your existing credit card balance more cheaply. Why you ask? Well the credit card companies usually only apply the zero interest arrangement to your balance transfer. Any news charges will incur the normal APR for that card!

Look for the longest possible zero interest period. The best we have seen recently is 20 months so shop around to give yourself the longest possible period to clear your balance.

If you are at all worried about being unable to make a monthly payment on your zero interest card make sure you know the consequences. Late payments can affect your credit card and may mean an instant increase in your APR.